Town Square

Palo Alto races against the clock on infrastructure fixes

When Palo Alto officials began their journey nearly three years ago to refresh the city's aged infrastructure, their expansive wish list included an upgraded Cubberley Community Center, street repairs and a host of bike improvements, including a new bike bridge over U.S. Highway 101.

If you are a paid subscriber, check to make sure you have
logged in.
Otherwise our system cannot recognize you as having full free access to our site.

If you are a paid print subscriber and haven't yet set up an online account,
click here
to get your online account activated.

Comments (32)

Like this comment

Posted by resident
a resident of Evergreen Park
on Oct 19, 2013 at 5:29 pm

It's hard to imagine a bond measure passing next year, given all the current controversies the City Council is in the midst of. I suggest they table this idea. How about bringing back an improved version of the business license tax idea?

Posted by Clyde
a resident of Esther Clark Park
on Oct 19, 2013 at 7:52 pm

How many polls does Council need to do to figure out that the voters do not trust them or Staff. Too many empty promises and one disaster of a project after anothr. No new taxes until a new Council shows it can be a responsible steward of our tax dollars and city.

Posted by common sense
a resident of Midtown
on Oct 19, 2013 at 9:15 pm

Famiglia,

Businesses do pay for schools; about 48% of property taxes everyone pays go to the schools, around 8% of property taxes go to the city. In addition all the "personal property" like cubes, desks, computers, etc is taxed every year, and the same ratio goes to the the schools & city.

Businesses also have out of town visitors who stay at local hotels, and their stay at the hotel is taxed at 12% of the room rate. And they support the restaurants when they eat locally, with the sales tax on their meals. And they pay sales tax on stuff they sell/buy. Out of the 8.75% sales tax, the city gets 1%.

And Businesses pay a utility users tax.

You know who doesn't pay for schools - all that BMR housing, like the development being proposed on Maybell. So out of the over 1000 housing units of BMR rentals, many of which send kids to the local schools, not one penny is being paid to the school district.

Posted by Famiglia
a resident of Another Palo Alto neighborhood
on Oct 19, 2013 at 11:35 pm

common sense,

Would you know what the relative amount of property taxes is from homeowners compared to businesses in Palo Alto?

I recalled this data found by a Menlo Park resident when actually digging into the numbers

"by 2008, homeowners were paying two-thirds and commercial property owners one-third (of property taxes), despite the fact that the major development in the county over those 30 years was commercial property east of (U.S.) 101."Web Link

Restaurants, Stanford shopping center and shops downtown are also frequented by local residents.

Posted by common sense
a resident of Midtown
on Oct 20, 2013 at 12:47 am

Famiglia,

To me the issue isn't Prop 13, but it's the poor decision making the City Council has made over the past 10 years in spending the taxpayer's money.

10 years ago, the city budget was around $104 million; this year it is around $151 million - a growth of 45%. The CPI over the same period of time has grown only 24%.

Do you know where all that budget money has gone? Back in 2006, the City Council voted to enrich the city staff's pensions, from 2%/30 to 2.7%/30. What that means is that after working 30 years, instead of getting a pension equal to 60% of salary, the person gets a pension equal to 84% of salary. That increase in pension liability meant that much of that growth in revenue that the city got in the past 10 years has gone to paying this enrichment of pensions, not to fixing infrastructure or building a new public safety building - over $100 million in the past 10 years.

Even with that additional $100 million, the city has an unfunded pension liability, you won't find in any of the budget reports. Also left unspoken is that this unfunded pension liability is based on the pension fund earning a 7.5% return. In comparison a 30 year mortgage is only 4.25%. Any underperformance of the return on the pension fund will come back to us taxpayers.

Posted by common sense
a resident of Midtown
on Oct 20, 2013 at 7:48 am

Famiglia,

Sales of existing residential property is typically 2-3% per year; there has been a building boom with the addition of over 2,000 residential units between the 2000 census & the 2010 census; this has resulted in the population growing from 58,000 (year 2000) to 63,000 (year 2010). Assume the average price for each of those residential units is $1 million, then there is an additional $2 billion in property value, resulting in another $20 million in property taxes.

Also when houses have additions or when houses are torn down and new ones built, there is a reassessment for the value added. I don't have data, but driving around and seeing many of the tear downs/McMansions built, that also has contributed to the property tax base. Same thing happens with commercial property when an old company leaves, and a new company moves in; the improvements made increases the property tax base.

Posted by Resident
a resident of Another Palo Alto neighborhood
on Oct 20, 2013 at 8:33 am

Nowhere do they seem to think that better money management for the money they already have is a worthy goal.

I think that most residents would feel much happier about this if we knew that the Council and City Hall were looking at ways to save some of their wasteful spending habits. All we see is money being spent on frills and pet projects rather than trying to work out where the money has been misspent. Our property taxes continue to climb, there are more and more homes being built which means that there are more people contributing to the pie, but yet the City continues to feel that infrastructure is something they have no money to upgrade.

If I ran our household budget the way Palo Alto spends its income, I would be considered a spendthrift.

I just have no sympathy for the woes of those asking us to throw more money to them for basic bread and butter items.

Posted by Marrol
a resident of Embarcadero Oaks/Leland
on Oct 20, 2013 at 9:16 am

Poor planning and not having a logical financial plan on the part of our city leaders and elected officials have put us in this difficult position. The bad decisions that got us here unfortunately continue. They grossly overspent for decades, and continue to overspend on non-essential projects, feel-good services, and fluff. When you ignore your basic responsibility to pay for our essential civic needs from existing budgets, then this is what happens. They return once again, hat in hand, crying poor, and asking the tax payers to foot the bill for work that she have already been funded and completed.

Sorry, but they need to do what the rest of us do when we face expenditures in life, especially for the basic things like paying your bills, fixing the leaky pipes, or repairing the hole in the roof. You spend less, cut corners, eliminate the non-essential spending, save money, and find a way to pay for it within your existing. What you don't do is go to your employer and ask for a pay raise because you're not making enough money to pay for these essential things in your life. That's basically what the city is doing, and I say no to any bond measure, and no to a tax increase. It's time that we put them in their place and send a clear message that we're not going to bail you out again.

Posted by Famiglia
a resident of Another Palo Alto neighborhood
on Oct 20, 2013 at 10:20 am

Common sense,

"Assume the average price for each of those residential units is $1 million, then there is an additional $2 billion in property value, resulting in another $20 million in property taxes."

I would say this is conservative given the meteoric rise in home prices. What happened the last ten years may never happen again, and that should be part of the planning.

If the City is going to send me a bill, I want to know exactly what the numbers are, including the proportion of revenues by category (retail, housing, office space). Not in a 300 page document, but a one page summary with historical numbers back ten years.

Without a clear updated financial picture of the City finances, how can we be asked to contribute even more to the costs.

Homeowners are paying through the nose, I'm not sure businesses and developers are carrying the same weight until I see numbers, and until we know more, how can office parking be at the top of the list of priorities?

And worrying about parking without addressing traffic and the destruction of livability of the town?

@Famiglia - Great idea! I would love to see clear revenues and expenses by category and very specific category at that. How much revenue do we get from our Rec programs, from out field rentals, from Rinconada pool rentals and how much do they cost us? How much revenue does the Children's Theater produce and what does is cost us? Same for the Junior Museum, Libraries, etc.

@Marrol - the voice of reason as always, The City needs to bring expenditures in line with revenues and come up with a long term plan to stop frivolous spending (I consider anything that is not public safety related to be frivolous if there is not enough $$).

Posted by PA007
a resident of Community Center
on Oct 20, 2013 at 12:11 pm

No money left? Even with more than 30% increase of the property tax revenue? It's sad that all the fines, tax incomes and Stanford fund are here used to support the operation and the retirement for the city ....

Posted by Famiglia
a resident of Another Palo Alto neighborhood
on Oct 20, 2013 at 6:00 pm

palo alto resident,

"I personally feel we should focus on things that are essential.."

You know, that's the funny thing, on the one hand home prices are exploding. there is a major spike in office development, certainly in retail, restaurants, hotels, etc. so in theory things are supposed to be good!

When things are good, essential stuff should already be taken care without the need to debate, yet there are potholes everywhere, literally and figuratively, and everything from City Hall is a needy cry for help.

I will be looking for the one pager- two max with the executive summary. Including the proportion of property and sales taxes that is coming in from businesses broken out by retail, office space etc.

Posted by paco
a resident of Old Palo Alto
on Oct 21, 2013 at 10:31 am

It is easy to see why a infrastructure bond in 2014 is such a hard task for the public to grasp just by the reading the responses and the lack of those posting to remain focused on what the subject is. To the poster who claims all the city woes are because they offered their employees 2.7%/30, neither CalPERS or the city has ever had a pension plan such as 2.7%/30. Perhaps you should evaluate your comments prior to posting. It would appear your concern is that employees care enough about their community to stay employed with the city for 30 years. Not to worry, the inept city manager and city council have been promoting their philosopy that their employees are a "liability" for several years which has created a mass exodus of their most knowledgeable employees. What a great business model for success!

Posted by Joe
a resident of Another Palo Alto neighborhood
on Oct 21, 2013 at 11:54 am

&gt; Not to worry, the inept city manager and city council have been
&gt; promoting their philosopy that their employees are a "liability"
&gt; for several years which has created a mass exodus of their most
&gt; knowledgeable employees.

Posted by Joe
a resident of Another Palo Alto neighborhood
on Oct 21, 2013 at 12:06 pm

&gt; "Assume the average price for each of those residential units is
&gt; $1 million, then there is an additional $2 billion in property
&gt; value, resulting in another $20 million in property taxes."

The County Assessor publishes the yearly accessed value, and the number of parcels, for each of the municipalities in the county. The increase, or decrease, of aggregate assessed value can be obtain from this annual report.

Don't forget, that the PAUSD gets about 46% of every property tax dollar here in Palo Alto.

&gt; "10 years ago, the city budget was around $104 million;
&gt; this year it is around $151 million

Yes, this is one of the core issues we need to deal with. The City is now so cash-rich that it is seeing over 1 billion dollars every 7-8 years. About 85% of that money is spent on employee's salaries and benefits. Why? Well, because Palo Alto has never had a meaningful long-range financial plan, that targets a percentage of the yearly revenues into reserve funds to be used to deal with infrastructure issues. Year after year, we've seen the labor unions say: "how much money do you have in the general fund? Ok, we'll take it!" And the Councils have just caved in.

Of course, they have had a lot of help from residents who want new parks, and big libraries, lots of children's programs, and free shuttles, and this and that and the other. Council members, being political animals first, bend to the path of least resistance, and say "yes" to anyone who shows up wanting a hand out.

If the City government had managed to hold back just 5% a year from its yearly spending, it would have a nest egg of about 55 million dollars in the bank. If it could have held back more--then the nest egg would have been larger.

We have a City Council that believes that all you have to do is spend yourself broke--and then raise taxes. It's that simple.

Posted by Marrol
a resident of Embarcadero Oaks/Leland
on Oct 21, 2013 at 5:21 pm

You would think it would be the biggest no-brainer ever Crescent Park Dad, especially for a small municipal government. The frivolous and irresponsible spending is an affront to the tax payers. Our city leaders and elected officials cater to the special interest and niche groups, seemingly without the slightest consideration of funding our base level civic needs through our existing budget. What did they think was going to happen.

It's high team that our city officials learn to say no to the special interests. They need to demonstrate some courage and begin to identify which city funded programs and services can either be outsourced, reduced, or eliminated entirely. Most recently they had an opportunity to take a positive step in that direction by outsourcing our animal services, but no, they allowed themselves to be shouted down by a vocal minority. They continue to spend on frivolous, non-essential projects such as park upgrades, playgrounds, commercial district make-overs, art center remodels, golf course design, and bike bridge construction. These are examples of desired improvements, certainly not essential ones. You don't spend millions of dollars on this type of civic work when we have no legitimate plan on how we're going to pay for our truly essential and critical needs in public safety and infrastructure. The solution that we're heard is to float another bond measure and raise taxes. No. Not after years of irresponsible spending. We tax payers have to send a clear message that we will not bail them out again. No on a bond measure. No on new taxes.

Posted by Joe
a resident of Another Palo Alto neighborhood
on Oct 21, 2013 at 7:26 pm

&gt; We don't really know exactly what the revenue growth has
&gt; been, which is why details are critical.

The City's budgets, and CAFR, are quite comprehensive, and have never been the point of criticism about a lack of clarity where the actual yearly revenues are concerned.

By simply using the yearly budgets, and building a small spreadsheet to track the revenues--the growth becomes clear.

There have been some problems with the budgets, over the years, not providing any sense of future liabilities for pensions, and healthcare, however.

&gt; If the City is out of cash

The City is not out of cash. The City's finances are a little hard to understand, if you only want to spend ten minutes looking at the budget. For instance, the City has some sizeable reserve funds set aside for dismantling a dam that it has co-ownership responsibilities for. Unfortunately, this money is in the Utility's Enterprise Fund domain, and can not be legally used for anything other than utilities.

In cases of financial challenge, the City can simply stop spending money, or it can borrow from some of its other reserve funds. However, this money does have to be paid back.

The question is: did the City use the money it had intelligently. If you believe that hiring a lot of people, and finding yourself committed to paying their pensions and healthcare after they retire--then the City did a bangup job. If, on the other hand, you believe that money from the Utility that was legally available to be spent for City infrastructure was not spent reducing the infrastructure--then you will be one of the many who believe that the City has wasted more than a decade's wealth on "services", and unnecessary expenditures, which made the Council, and Staff, "feel good".

Posted by Joe
a resident of Another Palo Alto neighborhood
on Oct 21, 2013 at 9:47 pm

&gt; we shouldn't each have to do a spreadsheet on our own,
&gt; to figure it all out.

You're right. The City should be making this information available on its "open data" web-pages. On the other hand, every person has some different point-of-view, so making the raw data available is the least we should expect from the City.

&gt; I actually don't want to see a budget.

Everything starts from the budget.

&gt; And what about this famous Utility fund?

The same information about the Utility Fund should be made available also. Sadly, no one on the Council, and few people in the electorate, seems to care about having access to this data.

I don't understand all the "Funds" lingo. General, Capital, Enterprise and the charges among each of them. The General Fund has Sales and Property Tax, the Enterprise Fund has "Net Sales" as Revenue. What would Net Sales be, sale of property?

This brochure also doesn't really have a detail for property tax revenues. Exactly how much is from homes, from office space. I don't see the pension items.

My hope is that Council/City can translate all this into a clearer analysis ( for years 2003-2012) but appreciate that there was once an attempt to do do so.

Posted by joe
a resident of Another Palo Alto neighborhood
on Oct 22, 2013 at 8:12 am

&gt; I don't understand all the "Funds" lingo. General, Capital,
&gt; Enterprise and the charges among each of them.

This can be confusing, particularly since municipal accounting is different than private sector accounting, in many ways.

However, all of these terms could be explained via a series of tutorials that the City could develop that could be uploaded to its web-site, or Youtube. We must come to accept that some things are complicated, and that complicated things are not readily explained, or understood, by everyone.

At some point, the residents need to comfortable with the fact that their City government has no intentions of explaining what it is doing with their money, or the residents need to make it very clear to the City that it needs to do a better, even much better, job than it has been doing explaining its activities, and results.

The City has actually done a better job in the past couple of years identifying future pension costs--but this has been driven by the Government Accounting Standards Board (GASB), rather than resident dissatisfaction with the work product of James Keene and his staff.

Many of your complaints could be answered with tutorials, and more transparency. Perhaps you might help by writing the Council to express your concerns, and outlining the kinds of information you would like to see delivered to the public on a yearly basis.

Don't miss out on the discussion!Sign up to be notified of new comments on this topic.

Email:

Post a comment

Posting an item on Town Square is simple and requires no registration. Just complete this form and hit "submit" and your topic will appear online.
Please be respectful and truthful in your postings so Town Square will continue to be a thoughtful gathering place for sharing community information
and opinion. All postings are subject to our TERMS OF USE, and may be deleted if deemed inappropriate by our staff.

We prefer that you use your real name, but you may use any "member" name you wish.

Palo Alto Weekly Holiday Fund
For the last 23 years, the Palo Alto Weekly Holiday Fund has given away more than $4 million to local nonprofits serving children and families. When you make a donation, every dollar is automatically doubled, and 100% of the funds go directly to local programs. Itâ€™s a great way to ensure your charitable donations are working at home.